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Colorado School-Finance Landscape Remains Bleak

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The crowds at Colorado's ski resorts and the upswing in the state's economy are doing little this winter to wipe the glum looks off the faces of the state's educators.

School officials have not had much to smile about since last November, when voters rejected a 1 cent sales-tax hike dedicated to public education while approving a measure that limits tax and spending increases by state and local governments.

Amendment 1, as the tax-limitation measure is known, did not create Colorado's current school-finance mess. Most observers blame state lawmakers for delaying hard decisions and using a series of budget tricks to fund schools over the past several years.

"Schools are facing immediate cuts, not so much because of Amendment 1, but because of the last five years of activity, and inactivity, by the legislature and the failure of Amendment 6,'' said Deborah Fallin, a spokeswoman for the Colorado Education Association.

Amendment 6 was the ballot measure that would have raised the sales tax, possibly providing enough to wipe out the projected education deficit of more than $300 million for the fiscal year that begins July 1.

But if it is not the fundamental cause, Amendment 1 has made the situation considerably more difficult for legislators and school districts by limiting their options for dealing with the projected deficit.

The constitutional amendment prohibits all new or increased taxes at both the state and local levels without voter approval. It also limits the overall increase in state spending each year to growth in prices and population. For districts, increased spending is limited to the inflation rate plus the percentage of increased enrollment.

7 Percent Aid Cut Seen

At the state level, legislators have just begun to consider school-finance measures. Early in the legislative session, some lawmakers hoped to resolve the question on a fast track, but that idea appears to have fallen by the wayside. It now appears that lawmakers will be contending with the issue until the final days of the session in early May, as they have done in recent years.

The state deficit for schools, projections of which have ranged from $303 million to $328 million, is being attributed mostly to an expected enrollment increase of 18,000 students, which will add costs to the school-finance formula.

There also was some discussion of revamping the complicated school-finance system established by the legislature in 1988, but key lawmakers now say the task could not be completed during the 120-day regular legislative session.

"We had just gotten the act to the point where it was working, and then Amendment 1 came along,'' said Rep. Norma V. Anderson, a Republican who is the chairwoman of the House education committee.

The main impact of Amendment 1 at the state level is the limit it will place on increased spending.

"If the legislature was so inclined, they don't have the ability anymore to raise taxes to meet the education shortfall,'' said Deb Gottshall, a legislative analyst.

The Republican-controlled legislature in any case has not been inclined to raise taxes in recent years, so the passage of Amendment 1 is politically moot on that point.

The spending provision in the amendment will limit the state budget increase to about $300 million, officials say. But there is a need for some $600 million in new spending just for education and Medicaid.

Gov. Roy Romer, a Democrat, has proposed a budget that would close about $100 million of the education shortfall, while the Joint Budget Committee's proposal would cover about $137 million of the shortfall by using more of the state's reserves.

Both of those proposals fall far short of the projected education-funding deficit, leaving districts with a possible 7 percent cut in their state contributions for next year.

'Afraid To Gamble'

But Amendment 1 may actually be creating more havoc at the district than at the state level.

In districts where assessed valuation has decreased, school officials in past years would have adjusted their millage rates to collect the same amount of revenue. But under one interpretation of Amendment 1, such an adjustment constitutes a revenue increase that must be approved by the voters.

"The advice we received was that we cannot do that under Amendment 1,'' said Velma Rose, the chief financial officer for the Denver schools. The district has a committee deciding which programs could be eliminated to deal with an expected $46 million deficit next year.

The school system in Littleton, a Denver suburb, approved a millage increase as part of its budget process last June to deal with just such a reduction in property valuation.

Although the tax increase technically took effect Jan. 1, the school board did not believe it required voter approval under Amendment 1, said Lyn Chambers, the district's spokeswoman. Without the change in the levy, the district would be short some $2.7 million, she added.

But Douglas Bruce, the Colorado Springs lawyer who authored the tax-limitation measure, brought a lawsuit challenging the district's stance.

"They were willfully violating the constitution,'' Mr. Bruce said. "There was a change in the levy. The issue is when the tax goes up, not when the vote is taken.''

Mr. Bruce added that he hopes the lawsuit against the district will serve as a warning that state taxpayers are ready to make sure governments will abide by the measure.

Ms. Chambers responded that "the board feels they took a legal action in the mill-levy increase because it was based on a budget adopted before the November election.''

A few other districts have taken action similar to Littleton's, but most have moved cautiously.

"There is a lot of fear out there,'' said Ms. Rose of Denver. "People are afraid to gamble in the legal arena.''

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